A watershed is an area of land that drains all the streams and rainfall to a common waterway. The word watershed is sometimes used interchangeably with drainage basin or catchment. A watershed consists of surface water-lakes, streams, reservoirs, and wetlands-and all the underlying ground water.
Larger watersheds contain many smaller watersheds. It all depends on the outflow point; all of the land that drains water to the outflow point is the watershed for that outflow location.